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Energy Insights, by Fairbanks Energy, examines a wide variety of topics within the energy sector. We discuss industry trends, compile the latest news, feature recent projects, highlight company updates, and give our own engineers a platform to answer questions within the field of energy conservation.

Efficiency is the Incentive in the Midwest Market

Rob Golden, Director of Midwest Business Development, authors "Efficiency is the Incentive in the Midwest Market" published with Connect Media. Read the full piece below.

Energy efficiency has become increasingly important for business owners to consider from the perspectives of both sustainability and cost of operations. Although rates vary across the 12 Midwestern states, the region as a whole boasts some of the lowest prices for electricity in the United States, in some cases two to three times cheaper than what companies on the coasts pay.

Businesses in a variety of sectors benefit from these low costs and the value they receive from their local utility providers. Because the costs are so low, however, many businesses don’t look for opportunities to save on energy, either because they’re unaware of the options, or because they don’t believe that other savings will add up to much and be worth the effort. Yet, even with the low base costs in the Midwest market, there are opportunities for cost-effective energy conservation, specifically by taking advantage of utility and tax incentives.

Many companies have inefficient equipment or equipment that runs long hours, making sense to target these areas for improvement. Mechanical systems, building automation, and lighting are all key areas where optimization can improve energy consumption. Retrofitting and updating equipment can increase energy efficiency, and many times results in projects that create significant savings while at the same time providing a reasonable return on investment. Examples of where companies can improve efficiencies:

Understandably, the process of initiating a new energy efficiency project or retrofit might seem daunting from a cost perspective. For eligible companies, the ability to obtain a utility incentive and/or tax benefit to help subsidize project costs is a key factor in making a return on investment compelling enough to move forward on a project. Although utility providers have offered incentives for years, these energy efficiency programs are often unknown or underutilized by the businesses that can use them the most.

Additionally, many businesses are helping pay for energy efficiency programs, as they’re often subsidized by a surcharge added to the bills. These funds are pooled to pay for business efficiency initiatives. There’s a certain logic to exploring how to take advantage of a local efficiency program, since your company is probably already paying for one. More importantly, there’s also a good chance that your competitors are lowering their operating expenses by reducing their energy usage, so it makes good business sense to do the same.

Utility companies in Minnesota and Illinois have some of the most efficient programs in the country, as measured by the American Council for an Energy-Efficient Economy’s (ACEEE), Chicago-based Commonwealth Edison ranked eighth and Minnesota-based Xcel Energy came in 10th among their peers nationally. The scorecard takes into account three categories when determining the rankings: energy efficiency program performance, program diversity and energy efficiency-related policy.

Incentives and tax breaks are the key money-saving opportunities in most utility markets, but they are not available to all companies. Public-sector and non-profit companies are ineligible for most tax breaks. And, while many utilities offer programs designed to provide an incentive to commercial customers to install more efficient equipment and/or controls, the scope and quality of these programs vary depending on the companies administering them and the territories they cover.

Instead of navigating the incentive process alone, it’s best to partner with an experienced energy services provider (ESP) to manage the process. An ESP will develop, design and build the project, then apply for the utility incentives on the company’s behalf, leveraging their knowledge and experience to maximize the return on investment. The ESP streamlines the process of working with the utility, ensuring that the project qualifies for the highest level of incentives. The result is low capital outlay and a shorter project payback period for the customer, while reaping the benefits of an optimized facility and long-term energy savings.

Beyond the environmental benefits, performing a retrofit or a new energy efficiency project makes financial sense for companies seeking to reduce their operating costs and create a healthier bottom line. With the inclusion of incentive programs from energy utility providers when possible, businesses are achieving faster return on investment than ever before, making these initiatives even more popular. And now is the time to make this investment, because every moment that your business is not operating at peak energy efficiency is more money that goes from your bank account into that of your utility provider.